GVK Power & Infrastructure Ltd has struck a deal to acquire additional 14 per cent in Bangalore International Airport Ltd (BIAL) from Siemens for Rs 613 crore ($135 million), valuing BIAL at Rs 4,378 crore or just a shade below the $1 billion mark.
It will boost GVK Power & Infrastructure’s stake from the current 29 per cent to 43 per cent, making it the single largest shareholder of the airport.
The two have been reportedly in talks for a potential deal for over a year now. As the single largest shareholder of the airport, Siemens was bound to stay invested for at least three years before part-selling its stake and wait another four years to exit completely. The three-year lock-in was complete early this year.
Although there were rumours of Siemens looking at a third party to sell the first tranche of stake due to valuation differences, now a step-down subsidiary of GVK Power & Infrastructure has exercised its right of first refusal, for acquiring 53.84 million shares held by Siemens Project Ventures GMBH (Siemens), representing 14 per cent of the issued capital of BIAL at a price of Rs 114 per equity share, the firm said on Monday.
GVK Power & Infrastructure scrip rose 1.75 per cent to close at Rs 17.4 a share at the BSE on Monday (August 22). The announcement came after trading stopped for the day.
Two years ago, GVK Power & Infrastructure had acquired stake from engineering and construction firm L&T and Zurich Airport for around Rs 1170 crore.
It had picked 12 per cent of BIAL from Zurich Airport for Rs 484.6 crore and followed it up by acquiring another 17 per cent from L&T for Rs 686 crore, which made it the second largest shareholder in the airport, behind Siemens. Both these transactions were struck at a valuation of Rs 105 per share of BIAL.
The latest transaction is at 8.5 per cent premium to these twin deals, struck at the fag end of 2009.
Early this year, a subsidiary of energy-to-infrastructure giant GVK Power & Infrastructure had signed a share purchase agreement with Bid Services Division (Mauritius) Ltd (BSDM) to buy 13.5 per cent stake in Mumbai International Airport Pvt Ltd (MIAL), thereby increasing its stake to 50.5 per cent. MIAL operates Chhatrapati Shivaji International Airport in Mumbai.
GVK runs two of the three busiest airports in the country, thus emerging as India’s largest airport operator in the private sector.
GMR Infrastructure, which runs the airport in Delhi and Hyderabad, is another large private airport operator. Last month, GMR Infrastructure’s airport arm had raised $131 million (Rs 584.60 crore) from the private equity arm of Standard Chartered Plc. and funds managed by JM Financial-Old Lane. This investment came after GMR Airports Holding Ltd, which runs Delhi and Hyderabad airports, had raised another $200 million in March this year from SBI Macquarie Infrastructure Investments, a private equity fund jointly owned by the State Bank of India and Macquarie.